Unregulated Credit Card Rates Are Breaking Down Consumers
By Mike Mish Shedlock Oct 26, 2009 11:40 am
Increased rates will make Citigroup the Grinch this holiday season.
Here’s one from "HG" who writes:
Hey Mish,
We have a seven-figure net worth, no mortgage debt (we do own our own home), pay credit debt in full each month, and have credit scores of 726 and 702, respectively. We are 56 and 53 years old.
Just got the Citi 29.99 credit card rate increase notice. It's not limited to those who carry a balance, like the folks who carry $25,000 in debt.
Needless to say, I'm cutting it up on principle, but not closing it so that my credit limits don't go down.
HG
Matters of Principle
Want to take it out on Citigroup (C)? If so, then do what “HG” did.
If you have a Citibank credit card, just stop using the Citicard to deny Citigroup every cent you can.
It’s high time for people to stop buying junk they don’t need with money they don’t have. Citi's actions help.
Citibank Sends Two Million Letters
Here’s an email from "MJ", who writes:
Hi Mish,
I got a Citibank letter last week raising my interest rate to 29.99% from 7.99%. I have a 780 credit score and pay my account off every month. My limit was $18,200. I never made a late payment to Citibank (or anyone else).
When I called them to either maintain my current terms or opt-out, the rep told me she had been getting nothing but complaint calls all day. She said Citibank had sent out two million such letters. I was given one choice: accept the new terms or have my account canceled upon its expiration of December, 31, 2009. I told them to cancel the account.
The “Hail Mary” you describe is even larger than you imagined.
MJ
I’m hearing many stories about ridiculous rates, but this one takes the cake.
First Premier Bank Offers Card With 79.9% Rate
Consider “No, You're Reading That Right”.
Gordon Hageman couldn’t believe the credit card offer he got in the mail.
"My first thought, it was a mistake," Hageman said.
The wine distributor called the number on the offer, gave them the offer code, and verified his information. Sure enough, it was right: The pre-approved credit card came with a 79.9% APR
Yes, 79.9%.
The offer is for a Premier card from First Premier Bank, which is based in South Dakota. On its website, First Premier says it is the country's 10th largest issuer of Visa and MasterCard credit cards. The site also says it "focuses on individuals who have less-than-perfect credit but are actually still creditworthy."
According to information on the South Dakota Legislative website, there is "no maximum or usury restriction." In other words, the individual bank can set its own interest rate limits.
Several calls made to First Premier for a comment were not returned.
No positions in stocks mentioned.
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Reply
2009-10-26 13:48:50
MM example
I do not understand the loss of $270 in revenue.
If one loan defaults that is a minus $100.
So revenue is minus $70 ($30 - $100). The other two loans are still on the books as assets.
If all three defaulted it would be minus $270 and the default rate would be 100%.
What am I missing here?
If one loan defaults that is a minus $100.
So revenue is minus $70 ($30 - $100). The other two loans are still on the books as assets.
If all three defaulted it would be minus $270 and the default rate would be 100%.
What am I missing here?
2009-10-26 22:59:53
come on.. these rates are being applied at ALL card lenders. and they're sucking the life out borrowers. and it comes right out of consumer spending.
2009-10-27 08:57:02
Volatility on sale
The last easy short is floating your way. The seams are seen in detail.
There were mornings on the Comex trading floor when a low roar came from the ring before the opening. The opening call was "sharply lower". You just "knew" it was the start of something big. You "knew" that if you only traded this type of market, once or twice a year, you could do very well. You did not have the discipline to do so.
You have one more chance.
Do you hear the roar?
January 2011 puts are being given away. The banks are bankrupt, the system has failed. What are you waiting for?
All in.
The above is not investment advice. Buying puts is not appropriate for everyone. Speak to your Lehman advisor to determine if this is a suitable strategy for you. You can find her on the bread line, cutting the line.
There were mornings on the Comex trading floor when a low roar came from the ring before the opening. The opening call was "sharply lower". You just "knew" it was the start of something big. You "knew" that if you only traded this type of market, once or twice a year, you could do very well. You did not have the discipline to do so.
You have one more chance.
Do you hear the roar?
January 2011 puts are being given away. The banks are bankrupt, the system has failed. What are you waiting for?
All in.
The above is not investment advice. Buying puts is not appropriate for everyone. Speak to your Lehman advisor to determine if this is a suitable strategy for you. You can find her on the bread line, cutting the line.
2009-10-27 18:44:05
consumer debt levels
deflation
that is the word used here in MV
because the consumer debt levels of 130% are way to high
and need to come down to 50% DTI
and this is not counting mortgage debt either
round 2 has begun
that is the word used here in MV
because the consumer debt levels of 130% are way to high
and need to come down to 50% DTI
and this is not counting mortgage debt either
round 2 has begun
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